Municipalities want Ottawa to put them at centre of post-pandemic recovery

Canadian municipalities are hoping to play a central role in the post-COVID-19 economic recovery by using an injection of federal spending to kickstart local infrastructure projects.

While many cities and towns are in need of emergency funding to cover severe financial shortfalls created by the COVID-19 pandemic, the president of the Federation of Canadian Municipalities (FCM) said it’s not too early to start talking about an economic recovery that puts cities at its core.

“We could be a huge partner in really kickstarting the economy by having an in policy agreement with the federal government to add stimulus money to municipalities for infrastructure,” said Bill Karsten, head of the organization and a Halifax city councillor.

A spokesperson for her office said Friday that Infrastructure Canada is already accelerating project funding approvals. Ahead of the summer construction season, most public infrastructure work has been deemed essential by the provinces.

Ed Holder, the mayor of London, Ont., the 10th-largest city in Canada, said he is looking for “bulk funding” from Ottawa to cover both operating losses during the pandemic and to allow municipalities discretion to fund local construction projects for the recovery period.

He said funding could support an electric bus project in London. The city of 400,000 residents assembled a pandemic task force in mid-March that concluded improvements to the local airport and broadband network, as well as funding shovel ready construction projects, could help kickstart the region’s recovery.

“We are at the heart of the economic recovery. It starts in London, Ontario. It starts in every municipality across this country,” Holder said. Indeed, Ottawa has signalled that the climate could be at the core of a recovery once the economy opens up.

Karsten said mayors have already raised the post-shutdown role of municipalities, which operate a majority of the country’s core infrastructure, in calls with Deputy Prime Minister Chrystia Freeland and McKenna.

Still, Karsten said municipalities need urgent “direct and predictable funding” from the federal government to cover operating losses. Some cities have already laid off workers and cancelled plans for seasonal hiring.

“The cash flow and the financial crunch is a real threat to our vital services that municipalities provide, at a time…when Canadians use them the most,” Karsten said.

Mayors have published alarming numbers. Toronto expects to lose $65 million weekly from the shutdown. For Vancouver, the figure is $5 million. Edmonton estimates a $110-million shortfall by September if restrictions continue.

Karsten said federal dollars can come through the Gas Tax Fund, which provides direct money to municipalities to support local infrastructure projects.

“A program like that certainly would be direct and predictable,” he said.

Prior to the crisis, the FCM had asked the Liberals to fulfill an election commitment in the 2020 budget to increase direct infrastructure funding for cities. Much of the infrastructure budget in Canada comes from federal-provincial funding agreements based on spending splits.

Previous economic recessions have seen governments dole out large sums of money toward “shovel ready” infrastructure based on the idea that construction has large economic spinoff effects. However, the pandemic differs characteristically from past recessions given how quick and deep the damage has been.

Kevin Page, the head of the Institute for Fiscal Studies and Democracy at the University of Ottawa, said a fiscal stimulus package should be considered given recent economic outlook scenarios, including ones by the International Monetary Fund and the Bank of Canada, suggest a “slow and bumpy recovery.”

Page said infrastructure projects such as repairing roads could fall under a short term injection, but that the moment should be used to address longer-term deficits. It includes climate-proofing infrastructure, public transit, high-speed broadband, and First Nations public infrastructure.

“Federal government will have to lead on fiscal stimulus,” Page said, noting lower levels of government, including municipalities, are facing fiscal sustainability issues and “will struggle to make ends meet.” Cities are, however, “ground zero for public services and tackling issues like COVID-19,” he said.

Holder, a former Conservative MP who held a London seat from 2008 to 2015, noted that the Harper government worked with provinces to require only one environmental assessment for project approvals coming out of the late 2000s recession.

“It sped up the process and sped up recovery,” he said.

A spokesperson for McKenna said she is working on a plan for “how infrastructure can help kick-start the economy,” speaking to a variety of experts in Canada and abroad. Press secretary Chantalle Aubertin said that includes looking into how to respond to “long-term challenges COVID has exposed.”

However, she did not say whether Ottawa will offer a bailout to municipalities to cover the crisis period. Based on project shortfalls municipalities have published to date, such a financial backstop would likely cost billions of dollars.

“Our government is acutely aware of their concerns,” Aubertin said.

Meanwhile, NDP infrastructure critic Taylor Bachrach wrote to McKenna on Thursday urging Ottawa to heed to calls from public transit authorities to provide $1 billion in emergency funding to cover lost fares.